Monthly Archives: March 2015

As I asserted in Part 1, I believe we are entering a “fourth generation” of television, one in which the rigid walls that have previously defined the industry are fundamentally disrupted. In the post-1.0 era, not only have consumers lived within “walled gardens” of content, but the industry itself has remained mostly closed to outsiders. When even companies as powerful as Intel and Google have tremendous struggles dealing with Hollywood, gaining access to content, etc, it’s almost comical to think of the startups who tried the same. Aereo’s $96 million in funding became about $1M in auction to TiVo this week.

This is mostly due to the incredible entanglement of contracts and legal issues pertaining to content ownership, distribution rights, release windows, playback, etc. Heck, even TV-related companies trying to change struggle with the mess. For context: We live in a world today that lets me buy NHL Gamecenter (directly from the NHL) yet not watch my hometown team (Montreal Canadiens, FTW) play “blacked out” games that air on, wait for it, the NHL Network.

The way I’ve always tried to describe the complexity to people is to think of taking a few dozen cables, neatly wound up, then throw em in a backpack and go for a quick jog. Then try to extract a single cable – good luck (for off-topic reading, here’s why that happens).

But we, today, are seeing important catalysts of change, and the catalysts are strong enough to make the powers that be look at how they can un-entangle their own mess. Here are the factors that I believe contribute strongest to a looming shift:

Netflix, Hulu, SlingTV, HBOGO, and TVE services break down the barriers to making content available through live and near-real-time streaming options. They also “train” content owners to think differently about distribution options.

iTunes, Google Play, and VOD services enable a la carte alternatives that are truly viable options to many consumers.

Pervasive 4G access, inexpensive smartphones, and tablets train consumers to demand anything/everything on all devices everywhere and all the time.

Bittorrent, Popcorn Time, and other piracy options have made finding and accessing high quality content for free far too easy for far too many people.

YouTube, Vimeo, and the suite of multichannel networks like Fullscreen are providing infinite entertainment alternatives to younger audiences, who may be losing the “attachment” to broadcast-quality television. This should be particularly scary to all sorts of companies – if the zeitgeist of pop culture shifts away from TV, we can expect to see more change, faster, than anyone can predict.

Cord cutting and dropping TV ratings are at the cusp of causing dramatic impact to advertisers, the unquestionable lifeblood of the industry.

“… we have seen in the last year that control of high quality content is being wrested from the hands of cable and satellite providers. Consumers are becoming increasingly aware of other great options for accessing their favorite content, and TV startups that make this process more seamless – or at the very least, more consumer friendly – have a great chance to thrive.”

Fundamentally the thing that’s made the TV industry “work” is the requirement and dependency on the two-tiered “middlemen” between content production and audiences. But if the audiences are shifting patterns, quickly, and the producers are able to find new methods of profitable content distribution, change will come. I can’t say it’s a “this year” thing or a “10 years from now” thing – but I do believe we’ve entered the phase wherein there’s industry awareness of changing times, and reactiveness is following.

I’d also argue that this was not the case over the past decade, and is directly attributable to why so many TV startups crashed and burned. As Eric Elia, Managing Director of Cainkade, puts it:

“The technology has been here for a while, but we’ve been waiting for 10 years for the TV industry dynamics to shift. The table is now set with [hundreds of millions of] streaming devices worldwide, the unbundling boom (HBO, CBS, Sling TV, etc), and a Netflix clone for every taste and geography. It’s going to be a fun few years for tools companies, programmers, ad tech. But I would not want to be a commodity content owner that can’t flap its wings outside the bundle.”

Now with any change we’ll see some mega-corporations begin their slow road to the deadpool, while others seize opportunities. We’ll see startups rise seemingly out of nowhere and become household names. Even five years ago cable and broadcast execs could easily keep their eyes on the distant horizon fearlessly – today, they’re building survival plans.

Next up: defining “TV 4.0”, identifying short-to-long-term opportunities, and other thoughts on why I think it’s a great time to be riding the wave of change in television.

Thinking back on the recent history of TV startups, I’ve come to the conclusion that this is likely the best time in history to start a TV or entertainment-related startup. This’ll be a two-parter from me, and I’ll start by a summary of the past 20-odd years of innovation and change in the industry. While many people would say the TV startups that came and went over the past 5 years (Aereo, Miso, GetGlue, ZillionTV, BeeTV, Yap, etc) and the ones still in play (Zeebox, i.tv, Peel, Viggle – disclosure: I work there! etc) were the “TV 2.0” startups, I’d actually argue they were the 3.0, and it’s now time for 4.0 (though I could easily go for 7.0 without a big stretch). Confused? Lemme ‘splain:

TV 1.0, or the “Plain Ol’ TV” era (1M BC to mid-1990’s): Technically we could say this is just the “three channel” era, and the advent of Cable TV then Satellite TV were the 2.0 and 3.0 endeavors. Now in reality the advent of Cable Television was unquestionably the biggest shift the industry’s ever seen, as it not only changed the financial dynamics in a massive way, but also set the stage for the huge providers that then themselves were set up to become dominant ISP’s.

But for today’s purposes, I’ll skip through to the mid-90’s, to define “TV 1.0” – a time where TV watching was all done on a “TV set”, likely with a set-top box, and the majority of TV watching was done “live” (something I’ll be explaining to my kids forever). To give it some context though, TV 1.0 startups included CBS, ABC, Comcast, etc.

TV 2.0, the “TV My Way” era (mid-1990’s to late-2000’s): Started with the DVR/timeshifting, included streaming media devices and placeshifting, ended with streaming. It’s almost impossible to explain how profoundly different TV is today than it was a mere decade ago. But to explain the difference between the previous decade is equally profound. First, the DVR moved TV off the default schedule, and onto our own personal schedule. Back then the only way a show could be “spoiled” was because you hadn’t watched your VCR tape, or some idiot friend from the East Coast called you (on your landline) and ruined a moment. My friend Richard Bullwinkle, former Chief Evangelist at TiVo says:

“The DVR was an excellent stopgap technology to help us all understand that Live TV was, if nothing else, inconvenient.”

With the advent of the Slingbox, and to a lesser degree a variety of streaming devices/services, TV then moved not only off schedule, but off-device. This change, called placeshifting, was the underpinnings of all forms of TV Everywhere, Netflix streaming, and everything else that moved the TV experience from primarily a “living room” activity to a “wherever I am” activity.

And then came a little video streaming site combined with Lazy Sunday, and poof, the world exploded. YouTube led to all forms of uploading/streaming, which led inevitably to the advent of Netflix streaming. Combine these pieces and you end up at the beginning of the 2010’s with the commonly accepted notion that “I watch *anything* I want, on *any device* I want, at *any time* I want, in *any location* I want. TV 2.0 startups included TiVo, ReplayTV, Sling Media, Roku, Netflix, YouTube, Hulu etc.

TV 3.0, the “Enhance TV” era (2010-2015): Combine the maturity of “Web 2.0”, which allowed developers to “mash up” any Internet services any way they saw fit, with the radically new availability of content and services from/related to the TV industry, with widespread access to powerful mobile devices and everywhere-access to high-speed Internet. What entered next was a wave of startups all focused on finding ways to “improve” the TV experience. Also sprinkle a dash of Venture Capitalists looking to find the next hitherto-undisrupted industries, and young entrepreneurs with visions of change.

Unfortunately we need to sour the story for a moment, as most of these ventures went belly-up. In some cases the companies needed deeper pockets and longer runways. In many others we were seeing technology solutions seeking out consumer or industry problems. Some are still up and running, and thriving. Most aren’t.

And with failure I think the most important thing to look at is what we should learn from it.

The TV experience was far from broken. For people who liked traditional/broadcast TV, aka the majority of TV audiences, all these new apps and services just put barriers between them and their beloved content. For people adopting streaming, on-demand, well, it’s already pretty awesome. Far too many startups went out with the proposition of “TV is broken” – it’s not.

People don’t want to multitask within TV. I can find a few dozen studies on how people are “second screening” their TV watching experiences. But this equates more to distracted living than some latent desire to watch a TV show and read “background” info written by an intern at the exact same time. Sure there are a few wins in this field, but not nearly enough to support a young startup.

YouTube is the best YouTube experience. While I can throw out a few ways to make YouTube a better experience (ahem – search while watching? better search algorithms? verified accounts?), fundamentally people are perfectly fine using YouTube as is. And as Hunter Walk put it best: “[YouTube discovery startups” struggle because video discovery just isn’t a venture scale business.”

SDKs and APIs don’t make TV an “open” business. I’ve watched a bunch of startups go after opportunities they see because companies like DirecTV and Hulu make API’s to access or interact with content. But these API’s are not the deep, raw access to services like Google Maps and Yelp provide, they are shallow services to enable very simple and basic access to limited feature sets. Maybe one day that’ll change, but until it does, there’s just not enough meat on the bones to support a startup.

Cord Cutting isn’t real enough. Want to hear an UN-sexy headline from a tech blog? How about “Pay TV Industry Alive and Well” or “Turns Out Almost 90% of Americans Like Paying for TV”? Ain’t gonna happen. So we’ve seen cord-cutting mania across the landscape, causing entrepreneurs and investors alike to think its a huge market/opportunity. We can all argue the numbers, but fundamentally until the past 3-6 months, there’s been no evidence, whatsoever, that there’s a big swell of people dying for some cord-cutting product that they’d then in turn payfor. Don’t get me wrong – this market will emerge one way or another, whether by cord-shaving or cord-nevers or cord-cutting itself. But it’s nascent today, and that’s a problem for a current startup funding climate that expects hockey-stick growth after two weeks of growth hacking.

Coming tomorrow(ish), part two: the rise of TV 4.0 and keys to success. Which focuses on a the following theme (well-said by Dana Loberg, founder of MovieLaLa):

It’s definitely an exciting time to be working in a startup in the entertainment /technology cross-section. There’s a lot of changes occurring because technology has fundamentally changed the way we communicate, engage with each other and even consume content.

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About

Jeremy Toeman is VP Products for CNET. He has over 15 years experience in the convergence of digital media, mobile entertainment, social entertainment, smart TV and consumer technology. Prior ventures and projects include Viggle, Dijit Media, Sling Media, VUDU, Clicker, DivX, Rovi, Mediabolic, Boxee, and many other consumer technology companies. This blog represents nothing but his personal opinion and outlook on things.